Genzyme Corporation, a U.S. biotechnology company announced on Thursday that it reached an agreement in principle to settle a shareholder class-action lawsuit for a whopping $64 million. The lawsuit in question seeks the consolidation of the biotechnology company’s tracking stock structure in 2003.
The company said that it used a formula in its charter to determine the share prices for the purpose of exchanging shares from the smaller oncology and biosurgery businesses.
However, some biosurgery shareholders felt that something was wrong with the move. The timing of the consolidation hurt the value of the shareholders’ holdings and a class- action lawsuit was filed on their behalf.
Under the terms of settlement, which will still be subject to court’s approval, Genzyme will pay the $64 million to a class of shareholders who held Genzyme Biosurgery stock on May 8, 2003.
Genzyme said the deal will result in the dismissal of the case in the U.S. District Court for the Southern District of New York. The company also believes that this settlement will lead to the dismissal of the related case pending in the Massachusetts Superior Court.
However, despite the said settlement in principle, Genzyme continues to believe that its consolidation of the tracking stock structure was done in accordance with the terms of the company’s charter, and to the long-term benefit of its shareholders.
Currently, shares of Genzyme dropped $2.34, or 3.7 percent, to $60.48 on Thursday. The company's stock has traded between $58.78 and $70.50 in the past year.